MPs, MLAs cannot be MD in urban co-op banks: RBI

MPs, MLAs cannot take up post of managing director in urban co-operative banks: RBI

The RBI has also limited the time period an MD can hold office in an urban co-operative bank

The Reserve Bank of India. Credit: AFP File Photo

The Reserve Bank of India (RBI) has stated in a recent circular that MPs and MLAs cannot take up the post of managing director or wholetime director in any urban co-operative bank. The circular goes on to state that one in that position should ideally have a degree or diploma in banking and finance, chartered or cost accountancy or at least be a graduate.

RBI, that regulates banks in India, has mentioned that the candidate taking over as MD in any cooperative bank should have at least eight years experience in middle or senior management roles in the banking industry, including the NBFC sector.

The RBI has also limited the time period an MD can hold office in an urban cooperative bank.  "The tenure of MD/ WTD shall not be for a period more than five years at a time subject to a minimum period of three years at the time of first appointment, unless terminated or removed earlier, and shall be eligible for re-appointment", the RBI said in its circular. "The post of the MD or WTD cannot be held by the same incumbent for more than 15 years."

"Thereafter, the individual will be eligible for re-appointment as MD / WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years,, subject to meeting other conditions. During this three-year cooling period, the individual shall not be appointed or associated with the bank in any capacity, either directly or indirectly."

If the MD or CEO of any urban cooperative bank has completed five years, it has to approach the RBI to seek re-appointment or appoint a new MD and CEO within two months. The circular was issued on June 25.

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